FED'S BULLARD: The dot plot is probably unnecessary

St. Louis Fed president James Bullard thinks the Federal Reserve
can do without publishing the 'dot
plot'.

The graphic, published with the Fed's Summary of Economic
Projections, is a representation of where the 12 FOMC members see
the benchmark fed funds rate at the end of the year, over the
next few years, and in the long run.

In a Bloomberg
interview on Wednesday, Bullard said he
has considered declining to provide a dot for the exercise,
as he gets more concerned about forward guidance from the Fed.

He said the issue with forward guidance is that markets may take
the Fed's projections as a promise.

He added that the dot plot may have helped spark the stock-market
sell-off at the beginning of this year.

When the Fed raised rates in December, the plot showed that FOMC
members saw four rate hikes this year. This was
lowered at its meeting last week to two. And despite this
reduction, the market is projecting a lower path of rate hikes.

Bullard said "this is not a good situation to have", as the
market is more dovish than the most dovish FOMC
member.

"I've been worried that [the gap between the market's and the
Fed's projections] would have to get reconciled in a violent way"
that causes a lot of turmoil in markets, he said. "I hope that
doesn't happen."

He added that he never really liked the balance or risks
statements, which show members' thoughts on potential decisions
in the future. He said there is an "overkill" how much certainty
FOMC members could have in preparing this.

Bullard thinks there is a case for the Fed to raise rates at its
meeting in April. In her
press conference, Fed chair Janet Yellen noted that every
meeting was "live," although the April session will not be
followed by a presser in which she can explain the rationale for
a hike.

Bullard said jobs growth accelerating faster than expected could
also boost the case for an April hike. He thinks the Fed would
overshoot on inflation, and doesn't think it would be a problem.

But the Fed should not raise rates with inflation expectations
falling.